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January 26 - February 10, 2022
Your number one goal as a leader is to develop a work environment consisting exclusively of stunning colleagues. Stunning colleagues accomplish significant amounts of important work and are exceptionally creative and passionate. Jerks, slackers, sweet people with nonstellar performance, or pessimists left on the team will bring down the performance of everyone.
“Only say about someone what you will say to their face.”
At Netflix, it is tantamount to being disloyal to the company if you fail to speak up when you disagree with a colleague or have feedback that could be helpful. After all, you could help the business—but you are choosing not to.
The first technique our managers use to get their employees to give them honest feedback is regularly putting feedback on the agenda of their one-on-one meetings with their staff. Don’t just ask for feedback but tell and show your employees it is expected. Put feedback as the first or last item on the agenda so that it’s set apart from your operational discussions. When the moment arrives, solicit and encourage the employee to give feedback to you (the boss) and then—if you like—you can reciprocate by giving feedback to them.
A culture of candor does not mean that you can speak your mind without concern for how it will impact others. On the contrary, it requires that everyone think carefully about the 4A guidelines. This requires reflection and sometimes preparation before you give feedback, as well as monitoring and coaching from those in charge.
Following other general critical-feedback guidelines—such as “Never give criticism when you’re still angry” and “Use a calm voice when giving corrective feedback”—could have helped too.
With a climate of candor, the boss is no longer the primary individual to correct an employee’s undesirable behavior. When the entire community speaks openly about which individual behaviors advance the company, and which don’t, the boss doesn’t have to get so involved in overseeing an employee’s work.
The Netflix ethos is that one superstar is better than two average people.
you just have to create an environment of trust, and ours is built through three company rules: (1) always act in the best interests of the company, (2) never do anything that makes it harder for others to achieve their goals, (3) do whatever you can to achieve your own goals.
When removing your vacation policy, explain that there is no need to ask for prior approval and that neither the employees themselves nor their managers are expected to keep track of their days away from the office. It is left to the employee alone to decide if and when he or she feels like taking a few hours, a day, a week, or a month off work. When you remove the vacation policy, it will leave a hole. What fills the hole is the context the boss provides for the team. Copious discussions must take place, setting the scene for how employees should approach vacation decisions. The practices
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When removing travel and expense policies, encourage managers to set context about how to spend money up front and to check employee receipts at the back end. If people overspend, set more context. With no expense controls, you’ll need your finance department to audit a portion of receipts annually. When you find people abusing the system, fire them and speak about the abuse openly—even when they are star performers in other ways. This is necessary so that others understand the ramifications of behaving irresponsibly. Some expenses may increase with freedom. But the costs from overspending are
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I realized during those long runs with Tristan that at Pure Software we had, without much thought, dummy-proofed the work environment. The result was that only dummies wanted to work there (well, not really dummies—but you get what I mean).
We decided to scour the market to find out how much our competitors would be willing to pay for Devin’s talents. Then we would pay him just over the very top of that range.
Devin’s team went on to create many of the foundational features that make up the Netflix platform today. I wanted all of our employees to be as influential as Devin had been, so we decided to apply the same method to determine the salaries of all future new hires.
At that spot, Matias mentioned that he was going to give me a twenty-three percent raise in order to keep my salary at top-of-market rate. I was so shocked I had to sit down next to the dim sum. I continued to have lots of success and felt I was very well paid. A year later, at annual salary review time, I wondered if I’d get another enormous raise. Matias surprised me again. This time he said, “Your performance has been excellent, and I’m delighted to have you on this team. The market for your position hasn’t changed much, so I’m not planning on giving you a raise this year.” That seemed fair
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No one should know your market range better than (first) you and (second) your boss.
The methods used by most companies to compensate employees are not ideal for a creative, high-talent-density workforce. Divide your workforce into creative and operational employees. Pay the creative workers top of market. This may mean hiring one exceptional individual instead of ten or more adequate people. Don’t pay performance-based bonuses. Put these resources into salary instead. Teach employees to develop their networks and to invest time in getting to know their own—and their teams’—market value on an ongoing basis. This might mean taking calls from recruiters or even going to
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On the other hand, when you share a secret, it floods the receiver with feelings of confidence and loyalty. If I tell you some huge mistake I made or share information that could sabotage my success, you think, Well, if she’d tell me that, she’d tell me anything. Your trust in me skyrockets. There is no better way to build trust quickly than to shine a light directly on a would-be secret.
Netflix treats employees like adults who can handle difficult information and I love that. This creates enormous feelings of commitment and buy-in from employees.
The pratfall effect is the tendency for someone’s appeal to increase or decrease after making a mistake, depending on his or her perceived ability to perform well in general.
a leader who has demonstrated competence and is liked by her team will build trust and prompt risk-taking when she widely sunshines her own mistakes.
The one exception is for a leader considered unproven or untrusted. In these cases you’ll want to build trust in your competency before shouting your mistakes.
To instigate a culture of transparency, consider what symbolic messages you send. Get rid of closed offices, assistants who act as guards, and locked spaces. Open up the books to your employees. Teach them how to read the P&L. Share sensitive financial and strategic information with everyone in the company. When making decisions that will impact your employees’ well-being, like reorganizations or layoffs, open up to the workforce early, before things are solidified. This will cause some anxiety and distraction, but the trust you build will outweigh the disadvantages. When transparency is in
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DON’T SEEK TO PLEASE YOUR BOSS. SEEK TO DO WHAT IS BEST FOR THE COMPANY.
Our dispersed decision-making model has become a foundation of our culture and one of the main reasons we have grown and innovated so quickly.
Yet Reed believes so deeply in dispersed decision-making that, by his model, only a CEO who is not busy is really doing his job.
When some of those bets don’t pay off, we just fix the problems that arise as quickly as possible and discuss what we’ve learned. In our creative business, rapid recovery is the best model.
“We don’t expect employees to get approval from their boss before they make decisions. But we do know that good decisions require a solid grasp of the context, feedback from people with different perspectives, and awareness of all the options.” If someone uses the freedom Netflix gives them to make important decisions without soliciting others’ viewpoints, Netflix considers that a demonstration of poor judgment.
The culture at Netflix had been sending the message to our people that, despite all our talk about candor, differences of opinion were not always welcome. That’s when we added a new element to our culture. We now say that it is disloyal to Netflix when you disagree with an idea and do not express that disagreement. By withholding your opinion, you are implicitly choosing to not help the company.
Although Reed certainly doesn’t intend to induce fear and trembling in his workforce, part of the reason that F&R works so well is because people do feel the burden of the responsibility that comes with the freedom and make extra efforts accordingly.
I was amazed and scared! They trusted me, so my judgment should be very sharp and my decisions impeccably researched. I would be making decisions for my boss, for the boss of my boss, for the boss of my boss of my boss and for all of Netflix, on my own, no approvals needed. I felt responsibility mixed with fear like I had never felt before! That feeling catapulted me to work harder than I have in my life, to assure each contract I signed would be a blessing for the entire company.
In a fast and innovative company, ownership of critical, big-ticket decisions should be dispersed across the workforce at all different levels, not allocated according to hierarchical status. In order for this to work the leader must teach her staff the Netflix principle, “Don’t seek to please your boss.” When new employees join the company, tell them they have a handful of metaphorical chips that they can make bets with. Some gambles will succeed, and some will fail. A worker’s performance will be judged on the collective outcome of his bets, not on the results from one single instance. To
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In order to encourage your managers to be tough on performance, teach them to use the Keeper Test: “Which of my people, if they told me they were leaving for a similar job at another company, would I fight hard to keep?” Avoid stack-ranking systems, as they create internal competition and discourage collaboration. For a high-performance culture, a professional sports team is a better metaphor than a family. Coach your managers to create strong feelings of commitment, cohesion, and camaraderie on the team, while continually making tough decisions to ensure the best player is manning each post.
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There is one Netflix guideline that, if practiced religiously, would force everyone to be either radically candid or radically quiet: “Only say about someone what you will say to their face.”
Candor is like going to the dentist. Even if you encourage everyone to brush daily, some won’t do it. Those who do may still miss the uncomfortable spots. A thorough session every six to twelve months ensures clean teeth and clear feedback. Performance reviews are not the best mechanism for a candid work environment, primarily because the feedback usually goes only one way (down) and comes from only one person (the boss). A 360 written report is a good mechanism for annual feedback. But avoid anonymity and numeric ratings, don’t link results to raises or promotions, and open up comments to
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That alignment of context drives employees to make decisions that support the mission and strategy of the overall organization. This is why the mantra at Netflix is HIGHLY ALIGNED, LOOSELY COUPLED
In order to lead with context, you need to have high talent density, your goal needs to be innovation (not error prevention), and you need to be operating in a loosely coupled system. Once these elements are in place, instead of telling people what to do, get in lockstep alignment by providing and debating all the context that will allow them to make good decisions. When one of your people does something dumb, don’t blame that person. Instead, ask yourself what context you failed to set. Are you articulate and inspiring enough in expressing your goals and strategy? Have you clearly explained
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